Fuwei Films Announces Fourth Quarter and Full Year 2013 Financial Results
-- Teleconference to be Held on Monday, April 14, 2014, at 9:00 a.m. EDT --

BEIJING, April 11, 2014 /PRNewswire/ -- Fuwei Films (Holdings) Co., Ltd. (Nasdaq: FFHL) ("Fuwei Films" or the "Company"), a manufacturer and distributor of high-quality BOPET plastic films in China, today announced its financial results for the fourth quarter and full year ended December 31, 2013.

Fuwei Films 2013 Highlights

Net revenues of RMB305.0 million or US$50.4 million.

Positive net cash from operations of RMB3.1 million or US$0.5 million.

Testing of a type of TFT-LCD optical film from Fuwei's third production line commenced with clients in the fourth quarter of 2013.

Fuwei Films was awarded the "Shandong Famous Brand" designation by Shandong Provincial Quality Supervision Bureau for an additional five years

A public auction was held on March 25, 2014 by the Weifang State-owned Assets Operation Administration Company, Fuwei's controlling shareholder, to sell over 6,912,503 (or 52.9%) of the Company's outstanding ordinary shares it owned. The successful bidder, Shandong SNTON Optical Materials Technology Co., Ltd., is expected to receive control over 6,912,503 (or 52.9%) of the Company's outstanding ordinary shares at a price of RMB101,800 (approximately US$16,573) or approximately US$2.40 per ordinary share. The transfer process is expected to be completed by the end of April 2014.

Mr. Xiaoan He, Chairman and CEO of Fuwei Films commented, "2013 was a challenging year for Fuwei Films with increased competition and excessive capacity resulting in significant reduction of selling prices. Despite the challenges in the marketplace, Fuwei Films focused on innovation and completed the trial operation of its third production line. We believe the addition of the third production line is a sound strategy that will help us deliver long-term value for our shareholders. We are confident that our high-end specialty films and enhanced product portfolio will help us attract new clients and expand relationships with existing customers. This strategy is designed to keep Fuwei Films strong despite global economic fluctuations. As we look to 2014, we will seek to capitalize upon opportunities in emerging markets and technologies by focusing efforts on continued innovation and R&D."

Fourth Quarter 2013 Results

Revenues for the fourth quarter of 2013 were RMB75.1 million or US$12.4 million, compared with RMB100.7 million in the fourth quarter of 2012, a decrease of RMB25.6 million, or 25.4%, mainly due to the decrease in selling prices and volumes compared to the same period in 2012 arising from stronger competition attributed to increased capacity in China and overseas.

Sales of specialty films for the fourth quarter of 2013 were RMB19.1 million or US$3.2 million, or 25.5% of total revenues, compared with RMB27.6 million or 27.4% of total revenue in the fourth quarter of 2012. The decrease was mainly attributable to decreased selling prices compared to those in 2012.

The following is a breakdown of commodity and specialty film sales for the three-month periods ended December 31, 2013 and 2012 (amounts in thousands):

Three months period ended

December 31,

2013

% of Total

December 31,

2012

% of Total

RMB

US$

RMB

Stamping and transfer film

35,166

5,809

46.9%

54,434

54.1%

Printing film

8,339

1,378

11.1%

8,621

8.6%

Metallized film

3,864

638

5.1%

4,520

4.5%

Specialty film

19,128

3,160

25.5%

27,603

27.4%

Base film for other applications

8,585

1,418

11.4%

5,492

5.5%

Total

75,082

12,403

100%

100,670

100%

Overseas sales for the fourth quarter of 2013 were RMB7.0 million or US$1.2 million, or 9.3% of total revenues, compared with RMB14.6 million or 14.5% of total revenues in the fourth quarter of 2012. The decrease in overseas sales was mainly due to the slow growth in demand from enhanced competition as well as anti-dumping measures taken by the USA and South Korea, which led to decreases in orders from the overseas market compared to the same period of 2012.

The following is a breakdown of domestic versus overseas sales for the three-month periods ended December 31, 2013 and 2012 (amounts in thousands):

Three-month period ended

December 31,

2013

% of Total

December 31,

2012

% of Total

RMB

US$

RMB

Sales in China

68,126

11,254

90.7%

86,070

85.5%

Sales in other countries

6,956

1,149

9.3%

14,600

14.5%

Total

75,082

12,403

100%

100,670

100.0%

Gross loss for the fourth quarter of 2013 was RMB 2.1 million or US$0.34 million, compared with a gross loss of RMB2.8 million in the fourth quarter of 2012. Gross loss margin was 2.8%, the same as compared with the fourth quarter of 2012.

Operating expenses for the fourth quarter of 2013 were RMB12.1 million or US$2.0 million compared with RMB24.9 million in the fourth quarter of 2012. This decrease was mainly due to the lack of goodwill impairment.

Operating loss for the fourth quarter of 2013 was RMB14.2 millionUS$2.3 million, compared with operating loss of RMB27.8 million in the fourth quarter of 2012.

Net loss attributable to the Company for the fourth quarter of 2013 was RMB0.5 million or US$0.08 million, compared with net loss attributable to the Company RMB 12.5 million in the fourth quarter of 2012. Basic and diluted loss per share was RMB0.04 or US$0.01, compared with basic and diluted loss per share of RMB0.96 in the fourth quarter of 2012.

2013 Full Year Results

During the fiscal year ended December 31, 2013, net revenues were RMB305.0 million or US$50.3 million, compared to RMB372.9 million during the same period in 2012, representing a decrease of RMB67.9 million or 18.2%, mainly due to the reduction of average sales price by 4.9% and total sales volumes by 14.0%. The reduction of average sales price caused a decrease of RMB15.6 million and sales volume accounted for a decrease of RMB52.3 million.

In 2013, sales of specialty films were RMB89.4 million or US$14.8 million or 29.3% of total revenues as compared to RMB92.5 million or 24.8% in 2012, which was a decrease of RMB3.1 million, or 3.4%, as compared to the same period in 2012. The reduction of average sales price caused a decrease of RMB5.6 million and sales volume factored an increase of RMB2.5 million. The decrease was largely attributable to the decrease in sales prices for films in electronics and high-end packaging.

The Company's revenue by significant types of films for the periods ended December 31, 2013 and 2012 is as follows (amounts in thousands):

For the year ended December 31,

2013

% of Total

2012

% of Total

RMB

US$

RMB

Stamping and transfer film

142,309

23,508

46.7%

202,029

54.2%

Printing film

27,852

4,601

9.1%

42,449

11.4%

Metallized film

17,686

2,922

5.8%

18,886

5.1%

Specialty film

89,382

14,764

29.3%

92,536

24.8%

Base film for other applications

27,721

4,579

9.1%

16,966

4.5%

304,950

50,374

100.0%

372,866

100.0%

Overseas sales were RMB41.9 million or US$6.9 million, or 13.7% of total revenues, compared with RMB70.6 million or 18.9% of total revenues in 2012. The increase of average sales price caused an increase of RMB1.6 million and sales volume accounted for a decrease of RMB30.3 million. The decrease in overseas sales was mainly due to the slow growth in demand, enhanced competition as well as anti-dumping measures taken by the USA and South Korea, which led to decreases in orders from the overseas market compared to the same period of 2012.

The following is a breakdown of domestic versus overseas sales for the periods ended December 31, 2013 and 2012 (amounts in thousands):

For the year ended December 31,

2013

% of Total

2012

% of Total

RMB

US$

RMB

Sales in China

263,076

43,457

86.3%

302,290

81.1%

Sales in other countries

41,874

6,917

13.7%

70,576

18.9%

304,950

50,374

100.0%

372,866

100.0%

Gross loss was RMB15.4 million or US$2.5 million for the year of 2013, representing a gross loss margin of 5.0%, as compared to a gross loss margin of 0.8% in 2012. Gross margin decreased by 4.2 percentage points compared to the same period in 2012. Our average unit sales price decreased by 4.9% compared to last year due to the excess capacity and stronger competition in the market. In addition, the main raw materials used in the production of BOPET films, polyethylene terephthalate (or PET) resin and additives, comprised approximately 71.4% of our total costs of goods sold and its prices were greatly influenced by price fluctuation in crude oil. Fuwei's main raw material costs, PET resin, were reduced by 3.0% compared to last year. Moreover, remaining costs with the exception of raw materials accounted for approximately 28.6% of our total cost of goods sold which increased by 1.1% compared to that in 2012. Consequently, the decrease in product sales price exceeded that in cost of goods sold per unit during 2013 compared with 2012, which contributed to the significant increase in gross loss.

Operating expenses during the year ended December 31, 2013 were RMB49.0 million or US$8.1 million, a decrease of RMB11.9 million, or 19.6%, as compared to 2012. The decrease was mainly due to lack of goodwill impairment for the year ended December 31, 2013.

Total other expense is a combination result of interest income, interest expense and other income (expense). Total other expenses during the year ended December 31, 2013 was RMB4.6 million or US$0.8 million, compared to total other income of RMB1.8 million in 2012. Total other expense of 2013 increased compared to 2012, was mainly due to the expense of interest in the current year while all interest payments were capitalized in 2012. Interest payments totaled RMB12.2 million or US$2.0 million during 2013, RMB1.0 million or 8.9% higher than that in 2012, which was mainly due to higher interest payments associated with the capital lease obligations.

Income tax benefit during the year ended December 31, 2013 was RMB10.0 million or US$1.7 million compared to an income tax benefit of RMB7.7 million during 2012, which was mainly attributable to tax effect of changes in deferred tax during 2013.

Net loss attributable to the Company for the full year 2013 was RMB59.0 million or US$9.7 million, compared with net loss of RMB54.4 million in 2012.

Net cash provided by operating activities was RMB3.1 million or US$0.5 million for the year ended December 31, 2013 as compared to net cash provided by operating activities of RMB46.5 million for the year ended December 31, 2012. This decrease in cash flows from operating activities was attributable primarily to the increased operating loss in 2013.

Cash and cash equivalents on December 31, 2013 was RMB11.6 million or US$1.9 million, compared with RMB5.0 million as of December 31, 2012.

Conference Call Information

The Company will host a teleconference on Monday, April 14, 2014, at 9:00 a.m. EDT / 9:00 p.m.Beijing time to discuss the financial results. To participate in the call, please dial +1-877-407-9205 in North America, or +1-201-689-8054 internationally, approximately 10 minutes prior to the scheduled start time.

A replay of the call can also be accessed via telephone by calling +1-877-660-6853 in North America, or +1-201-612-7415 internationally, and entering the following Conference ID: 13579477. The replay will be available until May 14, 2014, at 11:59 p.m. EDT.

About Fuwei Films

Fuwei Films conducts its business through its wholly owned subsidiary, Fuwei Films (Shandong) Co., Ltd. ("Shandong Fuwei"). Shandong Fuwei develops, manufactures and distributes high-quality plastic films using the biaxial oriented stretch technique, otherwise known as BOPET film (biaxially oriented polyethylene terephthalate). Fuwei Films' BOPET film is widely used to package food, medicine, cosmetics, tobacco, and alcohol, as well as in the imaging, electronics, and magnetic products industries.

Safe Harbor

This press release contains information that constitutes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is subject to risks. Risk factors that could contribute to such differences include those matters more fully disclosed in the Company's reports filed with the U.S. Securities and Exchange Commission which, among other things, include both the short and long-term effects of the global financial crisis on the Company and the BOPET film industry; competition in the BOPET film industry; growth of, and risks inherent in, the BOPET film industry in China; uncertainty as to future profitability and our ability to obtain adequate financing for our planned capital expenditure requirements; uncertainty as to our ability to continuously develop new BOPET film products and keep up with changes in BOPET film technology; risks associated with possible defects and errors in our products; uncertainty as to our ability to protect and enforce our intellectual property rights; uncertainty as to our ability to attract and retain qualified executives and personnel; and uncertainty in acquiring raw materials on time and on acceptable terms, particularly in view of the volatility in the prices of petroleum products in recent years. The forward-looking information provided herein represents the Company's estimates as of the date of the press release, and subsequent events and developments may cause the Company's estimates to change. The Company specifically disclaims any obligation to update the forward-looking information in the future. Therefore, this forward-looking information should not be relied upon as representing the Company's estimates of its future financial performance as of any date subsequent to the date of this press release. Actual results of our operations may differ materially from information contained in the forward-looking statements as a result of the risk factors.

FUWEI FILMS (HOLDINGS) CO., LTD AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAs of December 31, 2013 and 2012(amounts in thousands, except share and per share data)

December 31, 2013

December 31, 2012

RMB

US$

RMB

ASSETS

Current assets

Cash and cash equivalents

11,578

1,913

5,006

Restricted cash

41,422

6,842

21,457

Accounts and bills receivable, net

8,373

1,383

21,587

Inventories

38,454

6,352

34,291

Advance to suppliers

6,977

1,153

13,543

Prepayments and other receivables

26,107

4,313

26,174

Deferred tax assets - current

1,702

281

1,857

Total current assets

134,613

22,237

123,915

Property, plant and equipment, net

524,777

86,687

233,335

Construction in progress

632

104

337,990

Lease prepayments, net

18,999

3,138

19,523

Advance to suppliers - long term, net

2,134

353

5,299

Long-term deposit

16,760

2,769

16,760

Other Assets

13,244

2,188

262

Deferred tax assets - non current

20,888

3,450

10,466

Total assets

732,047

120,926

747,550

LIABILITIES AND EQUITY

Current liabilities

Short-term borrowings

105,000

17,345

110,000

Accounts payables

33,454

5,526

28,796

Notes payable

81,990

13,544

38,299

Advance from customers

14,665

2,422

11,714

Accrued expenses and other payables

6,777

1,119

6,831

Obligations under capital leases-current

8,314

1,373

6,282

Total current liabilities

250,200

41,329

201,922

Obligations under capital leases

8,563

1,415

13,718

Long-term loan

10,000

1,652

10,000

Deferred tax liabilities

3,736

617

3,476

Total liabilities

272,499

45,013

229,116

Equity

Shareholders' equity

Registered capital(of US$0.129752 par value; 20,000,000 shares

authorized; 13,062,500 issued and outstanding)

13,323

2,201

13,323

Additional paid-in capital

311,907

51,523

311,907

Statutory reserve

37,441

6,185

37,441

Retained earnings

96,370

15,919

155,341

Cumulative translation adjustment

1,266

210

1,222

Total shareholders' equity

460,307

76,038

519,234

Non-controlling interest

(759)

(125)

(800)

Total equity

459,548

75,913

518,434

Total liabilities and equity

732,047

120,926

747,550

FUWEI FILMS (HOLDINGS) CO., LTD AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)FOR THE THREE AND TWELVE-MONTH PERIODS ENDED DECEMBER 31, 2013 AND 2012(amounts in thousands except share and per share value)

The Three-Month Period Ended December 31,

The Twelve-Month Period Ended December 31,

2013

2012

2013

2012

RMB

US$

RMB

RMB

US$

RMB

Net sales

75,082

12,403

100,670

304,950

50,374

372,866

Cost of sales

77,152

12,745

103,498

320,375

52,922

375,973

Gross（loss)

(2,070)

(342)

(2,828)

(15,425)

(2,548)

(3,107)

Operating expenses

Selling expenses

4,878

806

4,887

16,839

2,782

18,212

Administrative expenses

7,204

1,190

9,771

32,130

5,307

32,389

Goodwill impairment

-

-

10,276

-

-

10,276

Total operating expenses

12,082

1,996

24,934

48,969

8,089

60,877

Operating (loss)

(14,152)

(2,338)

(27,762)

(64,394)

(10,637)

(63,984)

Other income /(expense)

- Interest income

189

31

(1,570)

1,024

169

1,022

- Interest expense

(647)

(107)

8,621

(10,094)

(1,667)

-

- Others income /(expense), net

4,898

809

323

4,505

744

798

Total other income /(expense)

4,440

733

7,374

(4,565)

(754)

1,820

(Loss) Income before provision

for income taxes

(9,712)

(1,605)

(20,388)

(68,959)

(11,391)

(62,164)

Income tax benefit (expense)

10,214

1,687

7,860

10,007

1,653

7,727

Net (Loss) /income

502

82

(12,528)

(58,952)

(9,738)

(54,437)

Net income (Loss) attributable to

noncontrolling interests

3

0

(1)

19

3

(10)

Net (loss) income attributable to the Company

499

82

(12,527)

(58,971)

(9,741)

(54,427)

Other comprehensive income

(loss):

- Foreign currency translation

adjustments attributable to

noncontrolling interest

8

1

7

22

4

8

- Foreign currency translation

adjustments attributable to

the Company

13

2

9

44

7

(8)

Comprehensive income (loss)

attributable to non-controlling

interest

11

1

6

41

7

(2)

Comprehensive (loss) income attribute to the Company

512

84

(12,518)

(58,927)

(9,734)

(54,435)

(Loss) Earnings per share, Basic and diluted

(0.04)

(0.01)

(0.96)

(4.51)

(0.74)

(4.17)

Weighted average number ordinary

shares, Basic and diluted

13,062,500

13,062,500

13,062,500

13,062,500

13,062,500

13,062,500

FUWEI FILMS (HOLDINGS) CO., LTD AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFor the Years Ended December 31, 2013, 2012 and 2011